Metals Market Is Still Quite Bifurcated
By
Avi Gilburt
When I look at the 3 charts that I follow in the metals complex, they seem to be telling a different story today, at least in their micro structures.
Silver seems to have broken out of its downtrend, and can be viewed as having completed wave i of its (c) wave to the target box above. GLD seems to be stuck in neutral, with the same “potential” structure as silver, but without as much clarity to its micro count as silver has potentially presented.
And, then we are left with the GDX. As long as the GDX remains below the 23.05 level, it still has a smaller degree set up to test the 22 region before a rally may ensue.
So, as you can see, the three charts we follow are really not in solid alignment, which adds to my perspective of this being a “region of uncertainty” for the complex as a whole.
Moreover, I have noted in the past that the ABX chart is what is potentially signaling that the GDX can follow it down. I have attached the intermediate term bearish potential in the ABX. As you can see, as long as the ABX remains below the resistance region noted on this chart, it will likely subdivide to as low as the 11 region. It would need to break out over resistance in impulsive fashion for me to consider otherwise. I will post this chart in the upcoming weeks, and lower the resistance as the stock does drop.
As far as the GDX is concerned, I maintain a similar expectation AS LONG AS WE REMAIN BELOW 24. As you can see on the daily chart, any rally I am expecting should remain below the 24 region if the GDX is going to remain in the same pattern presented in the ABX. I would need to see an impulsive structure move through 24 in GDX to consider the yellow alternative at this time.
In summary, I still expect a rally to ensue, and I would prefer to see GLD catch up to silver in that rally. However, I am not convinced that the GDX will share the potential that silver may see, where it can approach or even slightly exceed its September highs. Rather, any rally in GDX will likely be corrective in nature, in my humble opinion, but I will clearly remain open minded if we can see an impulsive structure move through 24.
